Fannie Mae predicts $2.72 trillion in mortgage originations in 2021 and $2.47 trillion in 2022. They anticipate purchase volume to go from $1.53 trillion in 2020 to $1.6 trillion in 2021 and $1.64 trillion in 2022.
The U.S. mortgage industry earned an average profit of $4,202 per loan on its way to record volume and a record $4.4 trillion in new loans originated in 2020, according to the Mortgage Bankers Association — and the perfect storm of low interest rates and high home values has kept the gold rush going in 2021. In other words, high volumes of mortgage loans are a big profit for banks, credit unions, etc.
Contrary to popular thought, most of the time when a bank originates a mortgage loan, it is sold on what is called the “secondary market” to provide the banks with instant profits/liquidity (cash). This is done simply because smaller banks/credit unions, which are the main players in the secondary market, incur costs associated with servicing or managing the loans on their books. This is where Fannie Mae, Freddie Mac, Mortgage Partnership Finance, and many other companies come into play.
Fannie and Freddie purchase home loans made by private firms, banks, and credit unions (provided the loans meet strict size, credit, and underwriting standards), package those loans into mortgage-backed securities, and guarantee the timely payment of principal and interest on those securities to outside investors. Fannie and Freddie also hold some home loans and mortgage securities in their own investment portfolios.
How Can Young & Associates Assist?
Loans eligible for purchase by Fannie Mae and Freddie Mac must adhere to strict size, credit, and underwriting standards. Fannie Mae and Freddie Mac require that all loans meet these standards and then require a certain randomized sample to undergo a “Quality Control” review ̶ which is what Young & Associates does.
We are an industry leader and provider of QC services for over 44 years and provide mortgage quality control services to meet government-sponsored enterprise and agency requirements. As a high-level definition, our QC consultants review a 10% sample of all loans originated in a period for a client (month/quarter) and reassure that it adheres to Fannie Mae and Freddie Mac Guidelines.
There are also other investors and Guarantors (two different terms), such as the Federal Department of Housing and Urban Development (HUD). HUD consists of FHA and VA loans. While Fannie Mae and Freddie Mac require the reviews to be done within 90 days of the prior period-end, HUD requires the reviews to be done in 60 days.
Superior Results at a Lower Cost
Maintaining the mortgage QC function in-house can be difficult given the time, staffing, and expertise required. Control the risks of noncompliance and reduce your costs by outsourcing your quality control to Young & Associates.
Our mortgage QC services include:
• Quality Control Plan Development
• Quality Control Reviews − approved, denied, and defaulted file reviews
• FHA Branch Audits
• Early Payment Default Review
• FHA/VA Denied Loan Review
• Pre-closing QC Reviews
• Reverse Audits
Organizations with a commitment to quality control recognize that quality begins before an application is taken and continues throughout the entire mortgage origination process.
Young & Associates is committed to your organization’s future success and we look forward to assisting you to ensure or enhance that success. Please visit our website, www.younginc.com, to learn more about us or contact Dave Reno at 330.442.3455 or [email protected].